Contraband smokes worth $3M in lost taxes

By Kirsten Goruk, edmontonjournal.com April 15, 2011

EDMONTON – The chief of the Montana First Nation and three other people will appear in Wetaskiwin provincial court on June 23 to face charges stemming from the province’s largest ever seizure of contraband tobacco.

Chief Carolyn Buffalo, Dickson and Ouimet are also charged with two counts each of illegally storing cigarettes not marked for sale.

The charges date back to January, when Alberta Gaming and Liquor Commission investigators say they found cartons containing 14 million cigarettes in a storage Quonset on the Montana First Nation.

AGLC spokeswoman Lynn Hutchings-Mah said that following an inventory of the products seized, the total is closer to 16 million cigarettes, worth roughly $3 million in lost taxes to the province.

Chady Moustarah, an Edmonton-based lawyer who represents both Buffalo and Dickson, said his clients are frustrated at being charged under the provincial Tobacco Tax Act.

“It was something that was anticipated,” Moustarah said. “But in a way, they’re shocked that the AGLC actually proceeded to charge them.”

Buffalo was suspended by her band in January, following the cigarette seizure, but fought the suspension in court and was reinstated on April 5.

Dickson is a partner with Rainbow Tobacco, a company based out of Kahnawake, a Mohawk community southwest of Montreal. According to the company’s website, they are licensed by the Canada Revenue Agency to sell tobacco products on native reserves and territories.

The company currently sells its cigarettes on reserves in Ontario and Quebec and last year began to expand the business to Western Canada.

Hutchings-Mah said Lucas is an Edmonton business owner, while Ouimet is also involved with Rainbow Tobacco.

In February, the Montana First Nation, Buffalo and Rainbow Tobacco, filed a lawsuit against the AGLC. The suit alleges the commission defamed them and demands the cigarettes be returned.

Moustarah said their defence against the charges will be the same as the one used for the lawsuit.

“Essentially they don’t have jurisdiction to enforce the provincial tax act on the aboriginal people and aboriginal lands,” he said.

Moustarah also said the recent charges won’t affect Buffalo’s ability to oversee the Montana First Nation.

“It can’t be any worse than what the affect was when they seized the tobacco. Originally they were making claims of sinister and criminal activity. Those issues have been cleared,” he said.

What does concern Moustarah is the fact that his clients were charged under the provincial Tobacco Tax Act.

“The question has to be raised why they didn’t charge anyone with criminal activities, if they relied on that when they got the search warrant from the judge to seize the tobacco,” he said.

Moustarah said he believes the government is mostly interested in recouping the tax revenue from the cigarettes.

The maximum penalty for convictions under the charges is a fine of $25,000, six months in prison or both. Those convicted could also face additional fines as high as three times the tax.

Alberta Finance Minister Lloyd Snelgrove would not comment on the charges because they are now before the courts.

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